Another way04 July 2019

Ramsoft’s approach to a critical spares review

The first step is to define what is meant by critical spares. Most companies have defined an equipment criticality, and have then used this criticality to select an approach to develop their maintenance strategies. RCM (reliability centred maintenance) is one technique for the 10-20% most critical equipment; less rigorous techniques are used for less critical equipment.

Some other companies have defined a spare part’s criticality and then also a desired service level (SL). This SL is used to support optimum inventories. Typical spare part criticality levels are vital, essential, desirable and non-critical, and are based on safety, environment and effect on service.

Ramsoft (UK) has developed several models and techniques to support optimum inventories and to reduce inventory costs, including a six-phase inventory improvement programme ‘ADCROM’ for existing facilities:

● MRO Audit (various types)

● Develop/Update MRO Processes, Procedures and Guides

● Cleanse MRO Master Data

● Rationalise and Standardise MRO Spare Parts

● Optimise MRO Inventory

● Measure MRO Performance

Phase five is to optimise inventory levels. An engineering warehouse may stock up to 20,000-line items; therefore, prioritisation of the analysis effort is required. Ramsoft defines critical spares reviews as being concerned with spare parts that are best suited to an analysis using stock-out costs. These will be spare parts with the following characteristics:

● Low or very low demand, a mean time between issues of three years or more

● Affects production significantly

● Failure is not predictable

● Significant costs

● Long lead times.

Critical spares with a reasonable demand can be easily optimised using statistical inventory analysis, based on the Poisson distribution. It is these high cost, very low demand items that are the problem for the maintenance department, which needs to define whether to stock or not, and if yes, how many to stock. Accountants typically consider parts in stock without any movement in two-to-three years as obsolete; the task is to demonstrate the stock level that minimises the total ownership cost.

For the maintenance strategy review (MSR), there is no single method used for all equipment; it is the same with the spare part review. The spares equivalent of RCM would be to use an off-the-shelf software tool, such as DST’s Inventory Optimiser. This tool allows the user to specify: populations; failure rates; spare cost a planned and emergency purchase; stock-out costs; planned and emergency lead times; probability of repair and associated repair times and costs; and holding costs.

One recent analysis that Ramsoft (UK) carried out for a power plant showed that the optimum stock level for a special valve, which wasn’t stocked, should be two. Stocking two reduces the potential risk exposure by $800,000 per year. Several spreadsheet software-based approaches may be used to provide a quicker analysis for less critical spare parts. A summary of all the approaches is shown below.

An example of a Poisson analysis review using a desired service level is shown main image. It shows that the proposed changes in stocking levels resulted in a 50% savings in average stock level value (ASLV) and still exceeds the 98% desired service level.

These two examples show the significant cost savings to be made by undertaking a structured MRO spare parts optimisation study, including critical spares review.